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My parents are hoping to divest some of their income to have

Customer Question
a lower tax liability. They have...
My parents are hoping to divest some of their income to have a lower tax liability.
They have been making gifts directly to children and also to educational institution (for tuition) and medical institutions (for grandchildren's dental work).
I am wondering if a contribution directly to a Long Term health policy of a child could be considered also a deductable item?
Submitted: 7 years ago.Category: Tax
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Answered in 1 minute by:
10/1/2010
Tax Professional: Richard, Tax Attorney replied 7 years ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,790
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Good afternoon. This would reduce their asset based and thus lower their income because they would have a lower asset base upon which to earn income, but it would not be a tax deductible expense.

 

 

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

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Customer reply replied 7 years ago
By asset base, do you mean that if this were spent from their income - it would mean they had less money to invest and hence less returns?

Are there other types of gifts they could contribute to other than Education and Medical?
Tax Professional: Richard, Tax Attorney replied 7 years ago
Yes. They can make any gifts they want, but they will not be income tax deductible.
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Customer reply replied 7 years ago
Money paid for a relative's Long Term Insurance would then not have to be reported as income? Similar to payments to an educational institution not being reported as income?
Tax Professional: Richard, Tax Attorney replied 7 years ago
It would be a gift, not income.
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Customer reply replied 7 years ago
As a gift would could this then lower their income base that is reported to IRS.
Tax Professional: Richard, Tax Attorney replied 7 years ago
No, gifts do not result in a deduction from your income for income tax purposes. The two concepts are separate and distinct.
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,790
Experience: 29 years of experience as a tax, real estate, and business attorney.
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